GUEST COMMENTARY: Back PFD payments are the stimulus Alaskans need now
As Alaskans face the current COVID-19 outbreak, we face a lot of uncertainty about how severe the disease’s spread will be. We hope that the disease’s spread can be slowed, and Alaska’s public health community is doing yeoman’s work to slow it.
But we already know that with this health crisis comes a severe economic crisis. We already face business closures, layoffs, and wage losses. And we aren’t out of the woods yet; far from it.
Alaskans will get through this as we always do: with tenacity, hard work, and caring for one another. But part of that means that we in state government need to do everything we can to help Alaskans ride out this economic crunch as best we can.
Economists disagree about many things, but nearly all of them agree: in times of economic crisis, the monetary authorities need to inject liquidity – cash – into the economy.
The federal government knows this well, and regularly takes steps to increase the money supply in times of economic crisis, usually by slashing interest rates.
But there’s a limit to how low interest rates can go, and we’re almost there already. Fortunately, there’s another solution: direct cash payments to Americans.
Sounds like something Alaskans know well, doesn’t it?
In Alaska, we know that our Permanent Fund dividends always provide a boost to our economy. We see it every year. The federal government knows it too, which is why President Trump and Senate Majority Leader Mitch McConnell each have proposals to pay cash directly to Americans.
Paying cash to every American is a big job, and it will take some time for the federal government to get set up to do that. But here in Alaska, we are already prepared – we do it every year. We already have the applicants, their eligibility has already been verified – because we paid them just a few months ago.
The Permanent Fund dividend is part of being Alaskan, but it is so much more than that. It has been found to significantly reduce obesity in Alaskan children. But most importantly, it has been found to lift between 15,000 and 25,000 Alaskans – especially children, rural residents, and Alaska Natives – out of poverty every year.
There really is no way to seriously address our looming economic crisis without giving this serious consideration. Many Alaskans are already finding themselves without income. The dividend is income. It’s the most direct solution, providing direct relief to the specific problem Alaskans are facing.
There are numerous examples of how Alaskans might use their dividend as relief from the hardships of this outbreak. A family in Chevak might use it to pay for fuel costs in rural Alaska; elderly Alaskan who can pay $500 per month for incontinence products not covered by Medicare could use it to pay for three months of adult diapers; a laid-off single mother could use it to put food on the table.
If this payment means that a family can pay their rent one month more, that by itself can keep them from losing their housing, having to go on expensive state services, and having their lives permanently and negatively disrupted.
The Legislature should immediately vote to pay the remaining dividend of $1,300 from our reserve account. This account currently has about $16 billion dollars. A withdrawal of $750 million from this account would cover the back dividend from 2019 and would fulfill a promise made to Alaskans in law. Another dividend should be paid to Alaskans in October.
This can’t wait. Restaurants, bars, schools, and many, many other gathering places and businesses have already been closed all over the state. They will remain closed for the duration of this COVID-19 outbreak, and we don’t know how long that will be.
The Great Alaska COVID-19 Recession is already here, and we need to act now to help Alaskans get through it as best we can. Alaskan wage earners are already finding themselves without hours to work and staring down bills they don’t know how to pay. It’s not a distant future, or even an imminent one; it’s here now. We can help Alaskans now, and we should.
Sen. Mia Costello is a lifelong Alaskan who represents West Anchorage in the Alaska Senate.